sales & distri & suppy chain mgmt

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Sales, Distribution and Supply Chain ManagementContentsUnit 1

Personal Selling and Sales Management Overview 1Unit 2Organizing the Sales Department 18Unit 3Sales Force Management 28Unit 4Directing and Controlling Sales Efforts 67Unit 5Logistics of Distribution 78Unit 6Channel Management 99Unit 7Recent Trends in Channel Management 127Unit 8Introduction to Supply Chain Management 135Unit 9Planning and Designing Supply Chain 152Unit 10Co-ordination in Supply Chain 164

Unit 11Issues Regarding Information Technologyand Supply Chain 177References 197Edition: Fall 2007BKID B0773 8th Nov. 2007Brig. (Dr). R. S. Grewal VSM (Retd.)Pro Vice ChancellorSikkim Manipal University of Health, Medical & Technological SciencesBoard of StudiesMr. Rajen PadukoneMember Academic Senate, Sikkim Manipal University

Ms. Vimala Parthasarathy Prof. K. V. VaramballyHOD DirectorConvener Manipal Institute of ManagementDepartment of Management & Commerce ManipalDirectorate of Distance EducationSikkim Manipal UniversityProf. Raj Dorai Mr. JagadeeshIndustry Consultant and Assistant ProfessorVisiting Faculty, IBA, IFIM and BIM, Department of Management &


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Bangalore Commerce, Directorate of DistanceEducation, Sikkim Manipal UniversityMr. Umesh Maiya Mr. R. Ravindra RaoAssistant Professor Senior FacultyDepartment of Management & Commerce Manipal Institute of ManagementDirectorate of Distance Education ManipalSikkim Manipal UniversityContent preparation TeamContent Writing and CompilationDr. Tribhuvan J.Professor, Garden City CollegeBangaloreFormat Editing Language EditingMr. Umesh Maiya Mr. Sridhar BhattAssistant Professor Lecturer in EnglishDepartment of Management & Commerce Government College,Directorate of Distance Education UdupiSikkim Manipal UniversityEdition: Fall 2007This book is a distance education module comprising of written and compiled

learning material for our students.All rights reserved. No part of this work may be reproduced in any form by anymeans without permission in writing from Sikkim Manipal University of Health,Medical and Technological Sciences, Gangtok, Sikkim.Printed and Published on behalf of Sikkim Manipal University of Health, Medical andTechnological Sciences, Gangtok, Sikkim by Mr. Rajkumar Mascreen, GM, ManipalUniversal Learning Pvt. Ltd., Manipal 576 104. Printed at Manipal Press Limited,Manipal.The focus of management has changed over time. Business thinking in the70s was driven by strategic planning and product portfolio approach.Success was dependent upon the ability of an organization to meet thedemand at the lowest cost, leading to economies of scale approach. The80s exposed the weakness of this approach and saw an upsurge in qualityconsciousness, leading to an increased emphasis on TQM, productreliability and customer satisfaction. Flexibility and responsiveness havebecome key business drivers for the 21st century, forcing businesses toorient themselves along processes instead of functions.Selling products to the customers has become a challenging task amidsttough competition. In case of financial services and commercial banking,any position that deals in sales management, commercial and industrialsales will prove to be very challenging. It is in this regard that good salespersonnel must be regarded as an asset to any organization. A salesexecutive requires the ability to successfully prospect for new salesopportunities in the mid-market sector across various vertical markets.Additionally, one must be competent in developing and executing a winningsales strategy.Businesses must be willing to change their attitudes, routines and theirideas of how things need to run. Supply chains can be tremendous assets tocompanies and their vendors. A supply chain consists of all of the entitiesnecessary to transform ideas into delivered products and services. Supplychain management directs and transforms a firm's resources in order todesign, purchase, produce, and deliver high-quality goods and services.This courseware has been carefully designed to incorporate all essential


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aspects of sales management and supply chain management.This book comprises 11 units:Unit 1: Personal Selling and Sales Management OverviewDeals with the meaning and objectives of personal selling. Also discussesmethods to design new sales and marketing process.

SUBJECT INTRODUCTIONUnit 2: Organizing the Sales DepartmentDiscusses the essential duties and responsibilities of a sales executive. Alsodeals with sales department relations and distributive network relations.Unit 3: Sales Force ManagementFocusses on recruitment, selection and training of sales personnel.Unit 4: Directing and Controlling Sales EffortsDeals with the sales budget, sales territories, sales control and costanalysis.Unit 5: Logistics of DistributionDeals with the meaning, functions and the process of logistics.Unit 6: Channel ManagementDeals with the policies of marketing channels, designing channels,assessing channel performance and managing channel relationships.Unit 7: Recent Trends in Channel ManagementDiscusses wholesaling and retailing, while dealing with the ethical and socialissues in sales and distribution management.Unit 8: Introduction to Supply Chain ManagementDeals with the meaning and definition of supply chain as well as theobjectives and the process of supply chain management.Unit 9: Planning and Designing Supply ChainThrows light on supply chain integration, forecasting in supply chain andmanaging demand and supply.Unit 10: Co-ordination in Supply ChainDiscusses the obstacles in supply chain co-ordination. Also deals with

managerial leverages to achieve co-ordination while discussing the need foroutsourcing in supply chain management.Unit 11: Issues Regarding Information Technology and Supply ChainDeals with the use of Information Technology in supply chain managementwhile throwing light on e-business and supply chain.Sales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 1

Unit 1 Personal Selling andSales Management OverviewStructure:1.1 Introduction

Objectives1.2 Sales Management, Personal Selling and SalesmanshipSelf Assessment Questions I1.3 Setting Personal Selling Objectives1.4 Determining Sales-related Marketing Policies1.4.1 Sales and Marketing Company Policy: Case Study1.4.2 Methods to Design New Sales and Marketing Process1.4.3 Control of Sales and Marketing Policy and ProceduresSelf Assessment Questions II


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1.5 Formulating Personal Selling StrategySelf Assessment Questions III1.6 Summary1.7 Terminal Questions1.8 Answers to SAQs and TQs1.1 Introduction

When it comes to various positions in sales management, it is possible toget them in various companies and organizations including service-orientedinstitutions such as insurance, consulting agencies, banking and financialservices, and even government institutions.In case of financial services and commercial banking, any position thatdeals in sales management, commercial and industrial sales will prove to bevery challenging and at the same time a very rewarding experience, asthere are wide opportunities such as technical training, broad managementpractices and system selling.Sales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 2Due to the varied market requirements and market opportunities, the

engaged sales personnel will be in need of newer and sophisticatedtechniques and that too at constant intervals to match the market trends.The sales force will be required to be imparted with the latest interpersonaltraining techniques by duly taking into account their interests, background,academic training, technical skills, and enthusiasm in accepting newer rolesor responsibilities.In any kind of sales and sales management training programs, situation willbe different and one cannot have a standard set for time, format, length, etc.When it comes to the career path in sales, different companies will havedifferent career paths and it is better to look into each and every system ofthe company individually.Sales management and the business enterprise:

Sales management by itself is a very broad portfolio and it includes all levelsand positions such as new business selling, technical selling, trade sales,and missionary sales. In new business selling the personnel responsible forsales will not be assigned any specific location or area and there is also nodesignated account.The sales force formed for the technical selling will have areas or specificgeographical locations assigned for them and specific accounts will also bedesignated. In trade sales, the sales representatives are responsible forselling the manufactured goods to the wholesale dealers as well as retailtraders to fulfill the manufacturers target or the companys target.Missionary salespersons represent the manufacturing companies and theirresponsibilities include contacting retail sellers and decision makers of other

companies and making them to understand about the product and convincethem to buy. The job of any missionary sales representative will be in theSales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 3form of training or preparing personnel to take on actual sales work later onand there is no need for the representative to sell or close the deal.Persons holding sales management positions are required to show a verystrong and favourable performance and track record within a year or two,and such a target-oriented approach will see them climbing the corporate


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ladder fast. It is a fact and as realized by many persons engaged in salesline, sales management is the most wonderful and challenging option forclimbing up the ladder of success and at the same time very rewarding one.The team that is engaged in sales management will have the directopportunity to deal with the market and the personnel can make use of theirexpertise and experiences to deal with the human factor for clinching the

deal in their favor, as other marketers hardly or rarely meet or interact withcustomers for winning over.The opportunities such as direct interaction with a variety of customersincluding their own colleagues can make the sales management people veryconfident and give them a sense of achievement and they can do a highquality work by understanding the feel of the market and make use of theinformation for increasing the sales.There are various employment opportunities and many sales managementpositions can be clinched or grasped from various companies and when itcomes to companies, there are categories such as profit-orientedcompanies, non-profit organizations, and service-oriented industries such asinsurance, financial and banking services, consulting, and even government

agencies.The training that is being imparted to the sales management people will bevery expanse in nature and as such people are bound to know all detailsabout the product they sell so as to have and maintain a competitive edgeover others in the market. Any detailed knowledge about the product thatSales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 4they sell can certainly assist sales people in clarifying the doubts andexplaining things to the prospective buyers and thereby show an increase insales.At the first instance, the personnel who sell the products should believe inthe products they sell and without this understanding it will be a difficult task

for them to sell. Few of other important factors that directly impact the salesfigures are the motivation levels, initiatives shown by the sales team andeffective supervision by the managerial group of the organization. Further, agood analytical mind possessed by the sales people can help inunderstanding the market situations correctly in its real perspective and takecorrective actions or use alternate decisions to boost sales.Objectives:After studying this unit, you will be able to: Explain personal selling. State the five objectives of promotion that are met through personalselling Explain how the objectives of personal selling are set.

Explain direct marketing.1.2 Sales Management, Personal Selling and SalesmanshipPersonal Selling:Personal selling has a vital role in service, because of the large number ofservice businesses which involve personal interaction between the serviceprovider and the customer, the service being provided by a person not amachine and people becoming part of the service product.Many customers of service firms have a close and on-going relationship withthe service providers. Under these circumstances, selling has a pivotal role


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Sales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 5in the communication mix. In certain services, selling is the preeminentelement in the communication mix.Selling of services include prospect identification, sales call planning,preparation of presentations, handling objectives and closing a sale.

George, Kelly and Marshall suggest seven guidelines for selling services.They are:a. Orchestration of the service purchase encounterb. Facilitation of a quality assessment by customerc. Making the service tangibled. Emphasis on organizations imagee. Use of reference from external sourcesf. Recognition of importance of customer contact personnel, andg. Recognition of customer involvement during the service design processLack of training and resistance to selling are two commonly faced problemsin many services businesses. A sales management structure supported by aprogramme of sales training will help to improve the capacity of the sales

personnel. Market orientation development programmes are helpful toovercome the problem of resistance to selling.Sales Promotion:Sales promotion includes any marketing activity designed to sell a productor service. It involves many marketing tactics like price deals, bonus offers,additional services and gifts.Traditionally, sales promotion was used mainly in consumers goods market.Now many service firms also adopt sales promotion programmers to a largeextent.Sales promotion tools can be aimed at three groups:1. Customers: Free offers, sample demonstrations, coupons cash refunds,prizes, contests and warranties.

Sales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 62. Intermediaries: Free goods, discounts, advertising allowances, cooperativeadvertising, distribution contents and awards.3. Sales Force: Bonuses, awards, contests and prizes for best performer.Sales promotions are not always co-ordinated well with marketing objectivesand other components of the communications mix. In order to help todevelop, implement and test a promotions programme, the following stepsshould be taken:1. Decide the objectives of sales promotion and how they will support othercommunications and marketing mix elements.2. Determine the balance of promotions activity between customers

intermediaries and sales force.3. Decide the sales promotion tools to be used.4. For each element of sales promotions programme, Determine the amount of the incentive; Establish conditions for involvement; Decide on the length of the promotions; Choose the distribution method for promotions; and schedule thepromotion time-table.5. Decide on the sales promotion budget.


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6. Pretest the sales promotion budget.7. Launch the sales promotion programme.8. Evaluate the sales promotion programme.Public Relations:The institute of public relations of England defines public relations practiceas The planned and sustained effort to establish and maintain goodwill and

mutual understanding between an organization and its publics. Publicsinclude all the groups of people and organizations which have an interest inSales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 7the service company. So the employees also can be included. As publicsare more diverse, public relations is essential to communicate with them.Public relations is concerned with many marketing tasks like a. Building and maintaining image.b. Handling problems and issues smoothly,c. Reinforcing positioning,d. Influencing the public to a position favourable to the marketer ande. Preparing the public favorably while launching new services.

A service organizations image is made up of the collective experiences,views, attitudes and beliefs held about it. Public relations can use a range ofcommunication approaches to improve or maintain the image of a serviceorganisation. Overall objective with image is to ensure that an organisationis viewed more favourably, and is more familiar than competitors in themarket segments it serves.A wide range of tools can be used in the design of a public relationprogramme. These include publications, including press releases, annualreports, brochures, posters, articles and employee reports, Events, includingpress conferences, seminars, speeches, and conferences. Investor relationsaimed at gaining support of investors and analysts stories which createmedia coverage exhibitions including exhibits, displays, sponsorship of

charitable causes and community projects.Word-of-Mouth:One of the most distinctive features of promotion in service businesses isthe greater importance of referral and word-of-mouth communications. Ithighlights the importance of the people factor in service promotions.Customers utilizing a service, talk to other potential customers about theirexperiences. Such an endorsement has more reliability and impact than anadvertisement or other mass or personal communications mix elements.Sales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 8The multiplier effect from word-of-mouth is not uniform to all products. Itvaries from industry to industry and situation to situation. But a service

marketer should be careful about negative referrals as they tend to have agreater impact than positive experiences. Dissatisfied customers are likelyto talk about their experiences to more people and this can significantlyreduce the effectiveness of advertising and other elements of thecommunications mix.Direct Marketing:Direct marketing is recognized as a low cost and effective method forcommunicating with corporate customers due to increasing cost in directsales force. Developments in electronic media, telecommunications, internet


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etc. provide great opportunities for developing integrated programmers fordirect marketing activities. Consequently, many service firms have begun totake advantage of the benefits of a co-ordinated direct marketing program.Self Assessment Questions IState whether the following statements are True or False:1. The multiplier effect from word-of-mouth is uniform to all products..

2. Direct marketing is recognized as a low cost and effective method forcommunicating with corporate customers.3. Sales promotions are always co-ordinated well with marketing objectivesand other components of the communications mix.1.3 Setting the Objectives of Personal SellingPersonal selling is used to meet the five objectives of promotion in thefollowing ways: Building Product Awareness A common task of salespeople,especially when selling in business markets, is to educate customers onnew product offerings. But building awareness using personal selling isSales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 9

also important in consumer markets. As we will discuss, the advent ofcontrolled word-of-mouth marketing is leading to personal sellingbecoming a useful mechanism for introducing consumers to newproducts. Creating Interest The fact that personal selling involves person-topersoncommunication makes it a natural method for getting customersto experience a product for the first time. In fact, creating interest goeshand-in-hand with building product awareness as sales professionalscan often accomplish both objectives during the first encounter with apotential customer. Providing Information When salespeople engage customers a largepart of the conversation focuses on product information. Marketing

organizations provide their sales staff with large amount of sales supportincluding brochures, research reports, computer programs and manyother forms of informational material. Stimulating Demand By far, the most important objective of personalselling is to convince customers to make a purchase. In our nexttutorial, we will see how salespeople accomplish this when we offerdetailed coverage of the selling process used to gain customer orders. Reinforcing the Brand Most personal selling is intended to build longtermrelationships with customers. A strong relationship can only bebuilt over time and requires regular communication with a customer.Meeting with customers on a regular basis allows salespeople torepeatedly discuss their companys products and by doing so, help

strengthen customers knowledge of what the company has to offer.1.4 Determining Sales-related Marketing PoliciesIf you are an organization spending $500,000 or more on marketingexpenses (e.g. advertising, trade shows, print materials, direct mail, etc.)Sales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 10then STOP! We found it again. Do you ask why? Because marketinghas the greatest potential of being very unproductive.In fact, many marketing programs struggle to break even, and actually


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frequently lose money. So, if we increase the overall effectiveness, then wecan eliminate 50% or more of your wasted marketing efforts, whichtranslates into $250,000 in cash. So now, lets see how this actually worksin a real-life scenario.1.4.1 Sales and Marketing Company Policy: Case StudyAn organization with $500,000 in marketing expenses needed assistance.

We examined their sales and marketing process to understand and quantifythe lead flow, follow-up, and demand forecasting issues. Then we designedand implemented a process to improve their sales cycle efficiency and tie itcloser to their customers buying cycles. After the marketing reductions, wethen reinvested $100,000 back into new processes for public relations andCustomer Relationship Management (CRM), both of which were sufferingbadly.The metrics we developed reduced their marketing expenses by 60%overall and increased their sales cycle efficiency from 40% to 60% within 6months of implementing the new procedures. With these new processesand reports, the company now tracks sales cycle efficiency and life-timevalue rather than just sales quota achievement, as the measure of their

sales & marketing effectiveness. The result: an extra $300,000 in cash plusa 50% increase in process capability (capacity). As we have seen time andtime again, time can be our best friend, if only we let it.1.4.2 Methods to Design the New Sales and Marketing Process Improve Follow-up: Only about two percent (2%) of sales occur on thefirst contact. Eighty percent (80%) of sales will require five to eightSales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 11contacts before the sale closes. This means that if you are contactingthe prospect less than five times or more than eight times, then youcould have a problem with follow up. Sales Cycle Efficiency: Time kills deals. The speed at which aprospect is converted into a customer and the number of prospectsrequired to make that conversion determines your sales cycle efficiency.So ask yourself, are you taking the right steps to measure and reducelost sales? Life-time Value: How profitable a given customer is over time definesyour LTV or Life-time Value. Companies spend ten times more toacquire a customer than to keep a customer. However, existingcustomers are more likely to purchase again, spend more money, andtherefore become more profitable. If you dont know your LTV, then howdo you know how much money to spend and on which customersegment? Demand Forecasting: Every customer buys on a cycle. So this meansthat you should track cycle times and variance to increase the accuracyof your forecasting and the loyalty of the customer. Do you know whenyour customers need to reorder? Improve Lead Quality: Do you have methods in place to measure theconversion potential of each lead? Lead generation activities (i.e. forms)should pre-qualify every new lead so that you can take the right followup actions for the marketing offer. Strong leads produce strong sales. Increase Awareness: To keep the sales pipeline full of good qualityleads, you must continuously increase the awareness of your company


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and the solutions that it provides. Public relations is more efficient atbuilding awareness than advertising, yet many companies spend wildlySales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 12on advertising and trade shows while neglecting to fund public relationsefforts much at all. Increase your name recognition, not your budget.

Reduce Discounting: Discounts represent deficiencies in the salesand marketing processes, which means that you should use themsparingly. Instead, determine the root cause and then fix the processthats causing the need to discount. Show customers the added value,and they wont focus on price. Train Personnel: Provide your sales and marketing personnel regularformal training. This will arm them with better product knowledge as wellas presentation, negotiating and selling skills that will improveeffectiveness. This will boost both employee morale and the bottom line

a win-win.1.4.3 Control of Sales and Marketing Policy and ProceduresImprove your sales cycle efficiency. Reduce your marketing expenses. Tie

it closer to your customers buying cycles. And take control of your salesand marketing program to let it work for you.Improvement with Well-defined Policies and Procedures:With well-defined processes and procedures in place, you will increaseefficiency by reducing ineffective sales and marketing programs. And, again,we make such improvements to create more cash on hand all toward thatmillion dollar goal and to cross the finish line.Self Assessment Questions IIState whether the following statements are True or False:1. Discounts represent deficiencies in the sales and marketing processes.2. Many marketing programs struggle to break even, and actuallyfrequently lose money.

3. Well-defined processes and procedures in place will increase efficiencyby reducing ineffective sales and marketing programs.Sales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 13

1.5 Formulating Personal Selling StrategyA personal selling strategy works best for a complex, technical, unique,customized product with a poorly informed client. Such products are socomplex and technical that you need a trained, informed person to explainthem to their highly specialized customers. It is likely to have to becustomized for each individual sale, and its client doesn't have the time toread up on all the different ones on the market and why yours is better (andis thus uninformed).

To address all of these unique needs, you have to design your personalselling strategy to have three key elements: a knowledgeable salespersonor sales team, an understanding of your client, and a sales structuredesigned to give the salesperson enough power to make an irregular salebut still get rewarded for it.The SalespersonThe salesperson is the key to your personal sales strategy. So when you'rerecruiting salespeople, you should be willing to recruit the best and expect topay them a premium. There are two routes you can follow: You can hire


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someone with a good sales background and teach them about the science(or product); or you can hire someone with a good scientific background andteach them about sales. Usually, the choice you make will depend on howcomplicated your product is and who your customers are. An electronicimaging product is likely to be pretty technical, and your customer will likelybe a doctor or a scientist, so you'll want a scientist to be your salesperson,

both for credibility reasons and to give the customer what he is looking for. Ifthe person buying your product is a hospital administrator, you might thinkabout hiring someone with sales experience instead, because theadministrator will be used to buying from non-technical people and will likelybe more bottom-line oriented.Sales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 14The salesperson is your only link to the client. This means that they need toknow the product inside and out, so that when the customer has a questionor an issue with the product, it can be addressed immediately and notshuffled off to another staff person. They also need to know the competitors'products, so they can give accurate representations of why your imaging

technology is better. So to allow the salesperson to do their job well, youneed to give them lots of information. You also need to give your sales forceconsiderable power. Power to make a deal. Power to say "yes" to neededproduct customizations. And, of course, the power to say "no" to a deal thatwon't make the company money.Remember, also, that the salesperson is more than just a sales agent:They're a research and development tool. Their interactions with customersgive you more information about what modifications need to be done to yourproduct than any other source. They're market intelligence (because theyknow what other products are being sold, and why) as well as a way ofmaking your own product more customer-oriented.The Client

Throughout the marketing section, we've used the phrase "Know yourclient." It is just as important here as anywhere else. By understanding whatyour client needs in a product, you can better give the salesperson the toolsthey can use to fulfill that need. By understanding what a customer wants ina salesperson, you can tune your sales team to be just that. Do they want ahalf-hour presentation or just a 12-second pitch? A customized product theyhelp to design or a ready-to-use product, in their lab, tomorrow? Or maybethe purchaser isn't the user at all: A hospital administrator makes thepurchase decision, and a doctor uses the machine. Understanding this willhelp keep you from wasting salespersons time on selling the machine to thedoctor, who's not authorized to buy it anyway.Sales, Distribution and Supply Chain Management Unit 1

Sikkim Manipal University Page No. 15The Sales StructureRemember: In a personal selling strategy, your salesperson is your bestfriend. But, depending on the system you've set up for them, that personcan also be your worst enemy. Determining an appropriate incentive systemfor a sales force can be the most difficult job you'll have as a businessperson. The key is to keep your sales force motivated, without anyloopholes that they can use to take advantage of the system. For example:By giving quarterly sales quota-based bonuses but also giving the


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salesperson the authority to make big discounts, chances are, you're goingto get a lot of sales late in the quarter (as the salesperson desperately triesto make their quota). But you'll also see a cost to those sales: Chances are,they'll be discounted quite significantly, affecting your company's profits.Determining a good incentive system for your sales force is very difficult anddepends very much on what you're trying to do and the product you're trying

to sell. You can reward the sales team based on short-term sales goals,long-term sales, repeat sales, customer support, number of new prospects,under-budgeted expense reports, or a whole lot of other things, but chancesare, you'll have to fine-tune this structure as your business evolves, toemphasize what you want your sales force to do. Above all else, rememberthat your sales force isn't stupid and that they spend about as much timethinking about their paycheck as they do trying to sell your product, so theincentive structure you design will determine the behavior of your customer.Self Assessment Questions III1. In a personal selling strategy, _____________ is ones best friend.2. A ___________ works best for a complex, technical, unique, customizedproduct with a poorly informed client.

3. The salesperson is ones only link to _______.Sales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 16

1.6 Summary The sales management is the process of selling and buying goods andservices to the public with proper techniques. Personal selling has a vital role in service, because of the largenumber of service businesses which involve personal interactionbetween the service provider and the customer. Selling of services include prospect identification, sales call planning,preparation of presentations, handling objectives and closing a sale. Sales promotion includes any marketing activity designed to sell aproduct or service. Sales promotions are not always co-ordinated wellwith marketing objectives and other components of thecommunications mix. A service organizations image is made up of the collectiveexperiences, views, attitudes and beliefs held about it. Direct marketing is recognized as a low cost and effective method forcommunicating with corporate customers due to increasing cost indirect sales force. A personal selling strategy works best for a complex, technical,unique, customized product with a poorly informed client.1.7 Terminal Questions1. What is sales management? Explain.

2. Explain how a personal selling strategy can be formulated?3. What is direct marketing?4. State the five objectives of promotion that are met through personalselling.Sales, Distribution and Supply Chain Management Unit 1Sikkim Manipal University Page No. 17

1.8 Answers to SAQs and TQsSAQs I1. False 2. True 3. False


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SAQs II1. True 2. True 3. TrueSAQs III1. Salesperson2. Personal selling strategy3. The client

Answers to TQs:1. Refer to 1.22. Refer to 1.53. Refer to 1.24. Refer to 1.3Sales, Distribution and Supply Chain Management Unit 2Sikkim Manipal University Page No. 18

Unit 2 Organizing the Sales DepartmentStructure:2.1 IntroductionObjectives2.2 Essential Duties and Responsibilities of a Sales Executive2.3 The Sales Organization2.3.1 Nine Steps to Building a Winning Sales OrganizationSelf Assessment Questions I2.4 Sales Department Relations2.5 Distributive Network RelationsSelf Assessment Questions II2.6 Summary2.7 Terminal Questions2.8 Answers to SAQs and TQs2.1 IntroductionA sales executive requires the ability to successfully prospect for new salesopportunities in the mid-market sector across various vertical markets.Additionally, one must be competent in developing and executing a winningsales strategy. This includes developing new prospect opportunities. Thesuccessful candidate should be able to use consultative selling skills toclearly understand customers business requirements. The steps to buildinga winning sales organization have been described briefly in this unit.Objectives:After studying this unit, you will be able to: State the essential job duties and responsibilities of a sales executive. Explain the steps involved in building a winning sales organization.Sales, Distribution and Supply Chain Management Unit 2Sikkim Manipal University Page No. 19

2.2 Essential Duties and Responsibilities of a Sales Executive

Conducts cold calls, prospects and qualifies account opportunities; Develops pipeline of new opportunities while closing existingopportunities; Identifies and creates business needs with senior executive decisionmakers; Creates and communicates the value of Kronos solution with prospectsand clients; Builds relationships at all levels within organizations;


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Develops a detailed territory plan; Develops individual account strategies to effectively penetrate accounts; Develops thorough understanding of each account's industry andbusiness; Acts as a resource for multiple industries;Uses understanding of internal processes and resources to effectively

execute the sale.Essential Knowledge, Skills and Abilities:Communication: For all levels (executive, management, and operational), Able to clearly present information through the spoken or written word; Read and interpret complex information; Probe customers to uncover hidden information; Listen well.Influence & Persuasion: Able to convince others in both positive or negative circumstances; Use tact when expressing ideas or opinions; Present new ideas to decision makers;Sales, Distribution and Supply Chain Management Unit 2Sikkim Manipal University Page No. 20 Adapt presentations to suit a particular audience; respond to objectionssuccessfully.Initiative: Able to bring about great results from ordinary circumstances; Prepare for problems or opportunities in advance; Transform leads into productive business outcomes; Undertake additional responsibilities and respond to situations as theyarise without supervision.Negotiating: Able to obtain agreement from multiple parties throughout all stages ofthe sales cycle; Earn trust; Use good timing and carefully calculated strategies when bargaining; Communicate high value of services over the competition; Identify hidden agendas that might interfere with resolution of terms.Planning, Prioritizing, and Goal Setting: Able to prepare for emerging customer needs; Manage and close existing deals while cultivating new opportunities; Determine project urgency in a meaningful and practical way; Use goals to guide actions and create and execute detailed action plans.Reading the System/Political Advantage: Able to identify key people to bring about change;

Understand underlying political dynamics; Develop a network of contacts and target specific influential people toreach goals; Be aware of significant contributing factors to manage change.Sales, Distribution and Supply Chain Management Unit 2Sikkim Manipal University Page No. 21Benefits:Competitive compensation and full benefit package, including executive,


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incentive trip for high achievers that possess the drive and ambition tosurpass yearly quotas.Requirements:Education and Experience: Bachelors degree or equivalent preferred. Experience with Power Base Selling Methodology or similar programdesired. 5-7 years with proven experience selling software solutions at theC level in the mid-market space. Experience of selling HR and Payroll application-oriented software orsystems strongly preferred. Consistently exceeded a $1 Million + quota.2.3 The Sales Organization2.3.1 Nine Steps to Build a Winning Sales OrganizationIs your sales team performing far below potential?Step 1: Do nothingDo nothing. When you first arrive on the scene of a sales office in distress,don't do anything. Take the time to understand your organization's situation,

gather information about the people involved, and.Step 2: Analyze your problem(s)Analyze your problems. The example you set for your people is not enough,because many salespeople emulate the actions of their peers. Since manysalespeople play "follow the leader," you've got to ask yourself whichsalespeople your less experienced salespeople look up to. And, what kind ofexample are these "leaders" setting? You can get peak performance out ofSales, Distribution and Supply Chain Management Unit 2Sikkim Manipal University Page No. 22average producers if you can get average producers to emulate the successhabits demonstrated by a leading salesperson.Step 3: Find your success role model

In sports, when a player assumes more of a leadership role on a team, it'scalled "stepping up." Hopefully, you already have a few players capable ofstepping up. If so, talk to them. Help them see the importance of theirsuccess example, and ask them to share more of their knowledge andexperience with less experienced salespeople.Step 4: Don't tolerate mediocre sales performanceYou've got to decide you won't tolerate mediocre sales performance. Fartoo often, poorly performing salespeople are allowed to continue theirlackluster ways. A manager may not want to face the hassle of recruiting areplacement, or the manager may want to avoid confrontation. This is a bigmistake. A successful sales manager doesn't tie the ship to a poorperformer's anchor. Instead, successful managers take a "hands-on" role

with more performers by providing the coaching and training the poorperformer needs to improve performance.Your objective is to bring those that are lagging behind to "the intersection ofchoice." i.e. poor performers must make a decision themselves to eithera) recommit themselves to perform the necessary behaviours and activities,or b) leave the company immediately. There is a saying, "There's only onething worse than somebody who quits and leaves and that's somebodywho quits and stays." The key question is this: if you knew then what youknow now, is there anybody on your team you would not have hired? If so,


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get "hands-on" and escort that individual to his or her intersection of choice.Sales, Distribution and Supply Chain Management Unit 2Sikkim Manipal University Page No. 23Step 5: Install performance standardsInstall performance standards. You've got to communicate yourexpectations. So raise the BAR on everybody with standards that consist of

Behavior, Activity and Results. A behavior standard, for example, could beto arrive in the office every morning before 8 a.m. An activity standard couldbe to make a minimum of 25 telephone prospecting calls every day. A resultstandard could be that a sales rep with seven to nine months salesexperience must sell a minimum of $50,000 per month. On resultsstandards, set two standards. One, a lower "keep your job" standard.Salespeople who fall below the minimum standard for a three-month periodare placed on probation. If sales don't pick up in the next quarter, thatperson must be "desired." Another standard performance is of course, ahigher sales quota.Step 6: Desire those below minimum standardsDesire those below minimum standards. Your salespeople will be

wondering, "Do you really mean it?" The first person you desire will send aloud and clear message performance standards will be enforced. If youdon't enforce them, your standards are meaningless.Step 7: Coach, coach, and coach some moreCoach, coach, and coach some more. Don't be a "desk jockey". Get out andwork with your salespeople. If the only way to grow your people and yourbusiness.Step 8: Cultivate a better "quality of life"Cultivate a better "Quality of Life." Have more fun.Step 9: Know what each salesperson wantsKnow what each salesperson wants. Every person has his or her ownpersonal motivators. Your job is to find out what they are and help the

Sales, Distribution and Supply Chain Management Unit 2Sikkim Manipal University Page No. 24salesperson toward achievement. Sit down with each salesperson one-onone.Try to learn something about each of them: what are their goals withyour company and beyond? What is their past like? How can you help thembe, having, and do more?Sidebar:The five biggest mistakes a sales manager can make1. Too focused on closing deals instead of developing salespeople.2. Focused salespeople on "more calls" instead of "better calls."3. Spend too much time sequestered in their office, instead of workingand interacting with salespeople.

4. Assume that because someone has been trained, they know how tosell.No common "language" of selling for diagnosing opportunities.2.4 Sales Department Relations Providing professional and personalized support to customers. Providing accurate and complete information such as quotations,invoices and reports to customers and to the management. Creative and effective communication skills to establish presentationopportunities.


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Creating, updating and maintaining our Customers Database System.2.5 Distributive Network Relations-A case StudyFor instance, in the health group company the Distributive NetworkRelations are stated.Sales, Distribution and Supply Chain Management Unit 2Sikkim Manipal University Page No. 25

DescriptionUnited Health Group is an innovative leader in the health and well-beingindustry, serving more than 55 million Americans. The industry hasoutstanding clinical insight with consumer-friendly services and advancedtechnology to help people achieve optimal health.Secure Horizons is a division of Ovations, the segment within United HealthGroup exclusively focused on health and well-being for individuals age 50+.Secure Horizons provides a portfolio of health care products and services toindividuals eligible for Medicare. Secure Horizons is the largest and longesttenured Medicare Advantage business in the United States, with 2006membership of 1.4 million and revenues exceeding $14 Billion. SecureHorizons is comprised of over 2500 employees located across the U.S. who

pledge to help every senior Live Secure & Be Secure.This key position within Ovations is responsible for leading theorganization's Network Relations function. Ovations is a complex enterpriseserving nearly 1.5 million Medicare and Medicaid-eligible customers througha variety of products, programs and services that depend on supportive andhigh performing networks of healthcare providers. Working closely with theOvations Network Operations Group, and counterparts throughout UnitedHealth Group, the Director of Network Relations and his team will: Direct Ovations Provider Relations activity, in conjunction with ProviderCustomer Service areas. Collaborate with United Healthcares emerging Provider Experienceagenda.

Co-ordinate Legacy Provider Relations/United Health Networks teamactivity, including capitation and gain-share related support whereappropriate. Drive national Ovations provider engagement standards.Sales, Distribution and Supply Chain Management Unit 2Sikkim Manipal University Page No. 26 Support Ovations annual event planning calendar with Provider-orientedmaterials, information, and education. Ensure regulatory and contractual provider notification requirements aremet. Drive improved UHG service channel use and quality metrics.The success of this role will be determined by a well-organized and

thoughtfully executed network relations engagement plan, data-drivenevidence of favorable provider response to interactions with Ovationscustomers, and progressively streamlined and effective internal processesdedicated to serving network providers in their transactions with Ovationsadministrative and service capabilities.Self Assessment Questions IState whether the following statements are True or False:1. Poor performers must make a decision themselves either to recommitthemselves to perform the necessary behaviours and activities, or to


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leave the company immediately.2. In sports, when a player assumes more of a leadership role on a team,it's called "stepping up."2.6 SummaryThe sales executives play a major role in selling goods and services to theconsumers. They are the direct sellers of the products of the company to the

consumers. The network relations are very important to them. The salesdepartment has a larger role in retaining the sales volume of the products.The steps to building a winning sales organization have been describedbriefly in this unit.Sales, Distribution and Supply Chain Management Unit 2Sikkim Manipal University Page No. 27

2.7 Terminal Questions1. Explain in detail the duties of sales executives.2. The network relations are very important for a company. Explain.3. Write a short note on sales department relations.4. State the nine steps involved in building a winning sales organization.2.8 Answers to SAQs and TQs

SAQs I1. True2. TrueAnswers to TQs:1. Refer to 2.22. Refer to 2.53. Refer to 2.44. Refer to 2.3Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 28

Unit 3 Sales Force ManagementStructure:

3.1 IntroductionObjectives3.2 Principles of Personal Management3.3 Recruiting Sales PersonnelSelf Assessment Questions I3.4 Selecting Sales Personnel3.5 Sales Personnel Training Programs3.6 Motivating Sales PersonnelSelf Assessment Questions II3.7 Compensating Sales Personnel3.8 Managing Sales ExpensesSelf Assessment Questions III

3.9 Sales Meeting and Sales Contests3.9.1 Sales Contest Psychology3.9.2 Ten Sales Psychology FactorsSelf Assessment Questions IV3.10 Summary3.11 Terminal Questions3.12 Answers to SAQs and TQs3.1 Introduction


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Providing knowledgeable and responsive customer service is a priority ofevery organisation. Hence selection and training of sales personnel towardsachievement of this goal gains a lot of importance in any organization. Timemanagement is an essential skill for personal management. The essence oftime management is to organize and execute around priorities. This unitSales, Distribution and Supply Chain Management Unit 3

Sikkim Manipal University Page No. 29focuses on this aspect while dealing with recruitment, selection and trainingof sales personnel, in detail.Objectives:After studying this unit, you will be able to: Explain the meaning of personal management. Explain how to recruit sales personnel. Explain various sales personnel training programs. State why sales personnel need to be motivated. Explain the need for sales meeting and sales contests.3.2 Principles of Personal ManagementPut First Things First

Habit 1 I am the Programmer.Habit 2 Write the Program.Habit 3 Execute the Program.Habit 3 is Personal Management, the exercise of independent will to createa life congruent with your values, goals and mission. The fourth humanendowment, Independent Will, is the ability to make decisions and choicesand act upon them. Integrity is our ability to make and keep commitments toourselves. Management involves developing the specific application of theideas. We should lead from the right brain (creatively) and manage from theleft brain (analytically).In order to subordinate the feelings, impulses and moods to your values,you must have a burning "YES!" inside, making it possible to say "No" to

other things. The "Yes" is our purpose, passion, clear sense of direction andvalue.Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 30Personal ManagementTime management is an essential skill for personal management. Theessence of time management is to organize and execute around priorities.Methods of time management have developed in these stages: 1) notesand checklists - recognizing multiple demands on our time; 2) calendarsand appointment books - scheduling events and activities; 3) prioritizing,clarifying values - integrating our daily planning with goal setting (Thedownside of this approach is increasing efficiency can reduce the

spontaneity and relationships of life.); 4) managing ourselves rather thanmanaging time - focusing in preserving and enhancing relationships andaccomplishing results, thus maintaining the P/PC balance (productionversus building production capacity).A matrix can be made of the characteristics of activities, classifying them asurgent or not urgent, important or not important. List the activities screamingfor action as "Urgent." List the activities contributing to your mission, valueor high priority goals as "Important."Quadrant I activities are urgent and important - called problems or crises.


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Focusing on Quadrant I results in it getting bigger and bigger until itdominates you.Quadrant III activities are urgent and not important, and often misclassifiedas Quadrant I.Quadrant IV is the escape Quadrant - activities that are not urgent and notimportant.

Effective people stay out of Quadrants III and IV because they aren'timportant. They shrink Quadrant I down to size by spending more time inQuadrant II.Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 31Quadrant II activities are important, but not urgent. Working on thisQuadrant is the heart of personal time management. These are PCactivities.Quadrant II activities are high impact - activities that when done regularlywould make a tremendous difference in your life. (Including implementingthe Seven Habits.)Initially, the time for Quadrant II activities must come from Quadrants III and

IV. Quadrant I can't be ignored, but should eventually shrink with attention toQuadrant II.1) Prioritize 2) Organize around Priorities 3) Discipline yourselfSelf-discipline isn't enough. Without a principle center and a personalmission statement, we don't have the necessary foundation to sustain ourefforts.Covey has developed a Quadrant II organizer meeting six criteria:1. Coherence Integrates roles, goals, and priorities.2. Balance Keeps various roles before you so they're not neglected.3. Quadrant II Focus Weekly - the key is not to prioritize what's in yourschedule, but to schedule your priorities.4. A People Dimension Think of efficiency when dealing with things, but

effectiveness when dealing with people. The first person to consider interms of effectiveness is yourself. Schedules are subordinated topeople.5. Flexibility The organizer is your servant, not your master.6. PortabilityThere are four key activities in Quadrant II organizing, focusing on what youwant to accomplish for the next 7 days: 1) Identify Roles 2) Select Goalstwo or three items to accomplish for each role for the next week, includingSales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 32some of your longer term goals and personal mission statement3) Scheduling/Delegating including the freedom and flexibility to handle

unanticipated events and the ability to be spontaneous 4) Daily Adaptingeach day respond to unanticipated events, relationships and experiences ina meaningful way.Here are five advantages of this organizer: 1) It is principle-centered itenables you to see your time in the context of what's important and what'seffective. 2) It is conscience-directed it enables you to organize your lifearound your deepest values. 3) It defines your unique mission, includingvalues and long-term goals. 4) It helps you balance your life by identifyingroles. 5) It gives greater perspective through weekly organizing.


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The practical thread is a primary focus on relationships and a secondaryfocus on time, because people are more important than things.The second critical skill for personal management is delegation. Effectivelydelegating to others is perhaps the single most powerful high-leverageactivity there is. Delegation enables you to devote your energies to highlevel activities in addition to enabling personal growth for individuals and

organizations. Using delegation enables the managers to leverage theresults of their efforts as compared to functioning as a "producer."There are two types of delegation: Gofer Delegation and Supervision ofEfforts (Stewardship).Using Gofer Delegation requires dictating not only what to do, but how to doit. The supervisor then must function as a "boss," micromanaging theprogress of the "subordinate." The supervisor thus loses a lot of theleveraging benefits of delegation because of the demands on his time forfollow up. An adversarial relationship may also develop between thesupervisors and subordinate.Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 33

More effective managers use Stewardship Delegation, which focuses onresults instead of methods. People are able to choose the method toachieve the results. It takes more time up front, but has greater benefits.Stewardship Delegation depends on trust, but it takes time and patience.The people may need training and development to acquire the competenceto rise to the level of that trust.Stewardship Delegation requires a clear, up-front mutual understanding ofand commitment to expectations in five areas:1. Desired Results Have the person see it, describe it, make a qualitystatement of what the results will look like and by when they will beaccomplished.2. Guidelines Identify the parameters within which the individual should

operate, and what potential "failure paths" might be. Keep theresponsibility for results with the person delegated to.3. Resources Identify the resources available to accomplish the requiredresults.4. Accountability Set standards of performance to be used in evaluatingthe results and specific times when reporting and evaluation will takeplace.5. Consequences Specify what will happen as a result of the evaluation,including psychic or financial rewards and penalties.Using Stewardship Delegation, we are developing a goose (to producegolden eggs) based on internal commitment. We must avoid GoferDelegation to get the golden egg or we kill the goose - the worker reverts to

the gofer's credo: "Just tell me what to do and I'll do it."This approach is a new paradigm of delegation. The steward becomes hisown boss governed by his own conscience, including the commitment toagreed upon desired results. It also releases his creative energies towardSales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 34doing whatever is necessary in harmony with correct principles to achievethose desired results.Immature people can handle fewer results and need more guidelines and


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more accountability interviews. Mature people can handle more challengingdesired results with fewer guidelines and accountability interviews.3.4 Selecting Sales PersonnelStore Operations & Human ResourcesA retail jewellery sale normally requires face-to-face interaction between thecustomer and the sales associate, during which the items being considered

for purchase are removed from the display cases and presented one at atime with their respective qualities explained to the customer. Consumersurveys indicate that a key factor in the retail purchase of jewellery is thecustomers confidence in the sales associate.Customer SatisfactionA customer satisfaction index covering 12 criteria was introduced during2005/06 in certain trial stores and was expanded to all stores during2006/07. Each store is benchmarked against others in its district, region andacross the division based on customer feedback. The scores are reportedon a monthly basis, highlighting areas of good performance and those forimprovement.Sales, Distribution and Supply Chain Management Unit 3

Sikkim Manipal University Page No. 35TrainingProviding knowledgeable and responsive customer service is a priority, andis regarded by management as a key point of differentiation. It is believedthat highly trained store sales staff, with the necessary product knowledge tocommunicate the quality, attributes and competitive value of themerchandise, is critical to the success of the business. The development ofthe customer satisfaction index has improved the divisions ability to designand implement its training programmes by identifying areas of strength andopportunity.The US divisions substantial training and incentive programmes, for alllevels of store staff, are designed to play an important role in recruiting,

educating and retaining qualified store staff. The preferred practice is topromote managers at all levels from within the business in order to maintaincontinuity and familiarity with the divisions procedures.Retail sales personnel are encouraged to become certified demonologistsby graduating from comprehensive demonologists by graduating from acomprehensive correspondence course provided by the Diamond Council ofAmerica. Over 50% of the divisions full time sales staff who have completedtheir probationary period are certified demonologists or are training tobecome certified. All store managers are required to be thus qualified. Thenumber of certified demonologists employed by the US division increasedby 9% in 2006/07. Employees often continue their professional developmentthrough completion of further courses on gemstones.

Goals and IncentivesAll store employees are set daily performance standards and commit togoals. Sales contests and incentive programs also reward the achievementof specific targets with travel or additional cash awards. In addition to salesbasedincentives, bonuses are paid to store managers based on storeSales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 36contribution and to district managers based on the achievement of keyperformance objectives. In 2006/07 approximately 23% (2005/06: 24%) of


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store personnel remuneration was commission and incentive-based. UShead office bonuses are based on the performance of the division againstpredetermined annual profit targets. Promotion and salary decisions forprincipally non-management head office personnel are based onperformance against service level and production goals; for managers theyare based on annual objectives and performance against individual job

requirements.Store ManagerEach store is led by a store manager who is responsible for various storelevel operations including overall store sales and branch level variablecosts; certain personnel matters such as recruitment and training; andcustomer service. Administrative matters, including purchasing,merchandising, payroll, preparation of training materials, credit operationsand divisional operating procedures are consolidated at divisional level. Thisallows the store manager to focus on those tasks that can be best executedat a store level, while enabling the business to benefit from economies ofscale in administration and to help ensure consistency of execution acrossall the stores.

Recruitment, Retention and PromotionAlthough staff recruitment is primarily the responsibility of store and districtmanagers, a central recruitment function supplies field recruiters from its UShead office in Akron, Ohio. Methods such as internet recruitment are used toprovide stores with a larger number of better-qualified candidates fromwhich to select new staff.Management believes that the retention and recruitment of highly-qualifiedand well-trained staff in the US head office is essential to support the stores.Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 37A comprehensive in-house curriculum supplements specific job training andemphasizes the importance of the working partnership between stores and

the head office.A key motivator for all staff, and in particular for store based employees, isthe divisions practice of internal promotion. All District Managers and VicePresidents of Regional Operations have been a Store Manager within thedivision.UKTrainingManagement regards customer service as an essential element in thesuccess of its business. The Signet Jewellery Academy, a multi-yearprogramme and framework for training and measuring standards ofcapability, is operated for all store staff. As part of this programme, 1,000sales associates and 1,100 store managers and assistant store managers

(representing 81% of store management) have now passed the JewelleryEducation & Training Level 1 qualification accredited by the NationalAssociation of Goldsmiths. Upon completion of each of the four levels, staffare better able to deal with customer requirements. The programme wasenhanced during 2006/07 to improve basic product knowledge and jewelleryrepair skills and further developments are planned for 2007/08.Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 38ACE, an improved customer service and training programme was


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introduced in 2006/07 and will be developed further in 2007/08. ACE is aflexible programme consisting of six elements that better enable store staffto meet the needs of customers.In conjunction with the Signet Jewellery Academy, training in managementskills for all tiers of store operations management was developed further lastyear to support the enhanced store associate training programme and to

build general management skills.All store personnel have daily performance targets. They are given trainingand weekly feedback on their performance from store and field managementto help them achieve these targets.Recruitment and retentionRecruitment procedures, including online facilities, continue to improve thesuitability of new store personnel, helping to ensure that they meet key basicrequirements and are motivated to work within a jewellery storeenvironment. Field and human resources management are responsible forthe recruitment, review, training and development of sales staff, therebyensuring consistency in operating standards and procedures throughout thebusiness. All new store staff receive a structured induction programme that

covers all aspects of store operations, product knowledge and customerservice. A financial reward is received upon completion.The division-wide commission-based remuneration programme was inoperation for the whole year in 2006/07 for the first time. The level ofcommission paid is dependent on a combination of store and individualperformance. To continue to improve the recruitment and retention of topquality staff, a three year programme to enhance the employee benefitspackage was begun in 2006/07.Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 39PromotionThe divisions preferred policy is to promote store management from within

the business; approximately 80% of store management appointed in2006/07 was so promoted. Each chain always has a number of sales staffwho is qualified to advance to store management level, thus assuring theavailability of newly trained managers familiar with the divisions operatingstandards and procedures.Store supportIn order to increase staff selling time and to improve efficiency, operatingprocedures are routinely reviewed to identify opportunities to enhancecustomer service and reduce in-store administrative tasks. The Signetintranet provides a computer-based platform for improved communicationbetween stores and head office, with sales floor and back officeadministrative functions being simplified and standardized through this

medium.Opportunities for better store procedures and employment practices wereidentified through a staff opinion survey. It is believed that the resultsprovide a basis for further improvement in the motivation and retention ofstaff.Head OfficeManagement believes that successful recruitment, training and retention ofhead office staff are important. Accordingly, structured recruitment, trainingand performance management systems are in place. Internal career


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advancement is encouraged and is supported by succession planning.Teamwork and service to the stores are encouraged through a performancebonus plan for head office staff, which is based on the divisions results. Inthe first quarter of 2006/07 part of the divisional head office function wasSales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 40

relocated in order to enhance efficiency. The implementation of a three yearprogramme to improve training in head office will commence in 2007/08.Self Assessment Questions IState whether the following statements are True or False:1. Teamwork and service to the stores are encouraged through aperformance bonus plan.2. Opportunities for better store procedures and employment practices areidentified through a staff opinion survey.3. All store personnel have daily performance targets.3.5 Sales Personnel Training ProgramsSystem provides clients with extraordinary information about theircustomers, competition, sales representatives, other front-line personnel

and sales managers. By "extraordinary information" we meaninformation you can't get any other way, along with tools you need to useit productively.We bring together skills from a number of different disciplines and focusthem, single-mindedly, on the goal of improving your company's salesperformance.System has helped companies to: Increase sales; Reduce turnover of personnel ; Expand more efficiently ; Develop people faster and with less down time; Reduce training and development costs;

Generate a significant return on investment ; Improve selection of sales people and sales managers;Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 41Client TestimonialsSystems clients are continuously growing and reaping the benefits of theSystem on Track system:"This System program is really helping and working for me by puttingmy priorities in order. My New Years resolution was to focus on my teamand this personal development program is helping me fulfill thiscommitment.""I am more aware of things I need to work on.

"This process has helped focus my own development activity."The program has basically called my attention to the necessary detailrequired to be successful as a leader of sales reps.""I like the participant materials I received, particularly the ActionPlanner and Resources booklets. Since our corporate personaldevelopment plans are due soon this is going to help me greatly. It would begood for the District Sales Managers to get profiled as well!Regional Pharmaceutical Sales Manager going through SystemaonTrack


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"After being profiled and getting my plan and goals set on SystemaCoachLink, and working with my accountability coach I have seenincredible results. I have met with 2 new satellite managed care centers totake our product on formulary and I've been coaching my reps which hasincreased their motivation to sell more product!"

Attendees at Systema Advanced Sales Management Workshop (part of

Systema onTrack):"Love the fact that all material is specific and definite and written downfor future reference.""Great discussion because it leverages all the experience in the room.""Excellent models illustrated."Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 42

3.6 Motivating Sales PersonnelMotivating Sales People to Sell, What makes a good sales person tick?What combination of rewards and incentives will bring out their bestperformance? What can companies effectively do to motivate their salespeople to sell, while avoiding the peaks and valleys that so often accompany

sales achievement?Every sales organization asks these kinds of questions and whenproduction levels are down, revisits these issues over and over again. Were-examine what we're doing, and try to fine tune our "systems" to extract alittle more horsepower. By the time we're finished tweaking and tinkering,we often end up right back where we began!What's wrong with this picture?To find out I spoke with some of Gallatin Valley Montanas' most progressivecompanies, and asked them to share with us their formulae for success.Some of their answers may surprise you.But first, I looked within my own organization, and asked my client servicesmanager, Rich Powell, for some words of wisdom. Rich joined my staff in

April, after a successful career in sales and business management in thehighly competitive environments of Seattle and Honolulu.While Rich isn't opposed to commissions and profit shares, he made animportant point. In the long run, professional sales people are far moremotivated by their "belief" in the work they do, than in any particularcombination of bonuses, commissions and other incentives. Ultimately,sales people sell because they love to sell - and love what they sell. Theysee themselves as part of a dynamic, upward process. They identifystrongly with their customer, and with the product or service they provide.They believe in the importance of what they are doing, and see their jobs ashaving value and purpose.Sales, Distribution and Supply Chain Management Unit 3

Sikkim Manipal University Page No. 43A now-retired sales consultant for a daily newspaper trips to mind. Fred wasa delight to work with a real "pro". He instilled in his customers, theconfidence that he truly cared about their interests, and would go the extramile to serve their needs. No hype. No pressure. Just excellent service, builtaround integrity and credibility. In my opinion, he was the consummateprofessional sales person. And guess what? Fred earned no commissions;we worked on a salary basis only. What motivated Fred was not "turningthat next deal" or adding more commissions to his monthly tally. He was


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driven by his professional attitude, his love for his work, and an intensedesire to serve his customers well.Commissions: The good, the bad, the uglyThis is not an argument against paying sales commissions, but it is anacknowledgement that for most forms of sales, commissions are an option,not a necessity. The bottom line: if the employee you hired is not a true

salesperson, no amount of commissions will make them into one.Techniques can be trained, but basic personality factors are essentiallyunalterable. These personality traits are the single strongest predictionof one's likelihood of success in the field of sales.What makes commissions and performance bonuses so tricky, are theunintended consequences associated with poorly thought out policies. Oneof the biggest pitfalls is the tendency of individual sales commissions tocreate negative competition within a sales organization, leading toresentment, secrecy and plummeting morale. These side effects are evenmore pronounced when contests are added to the equation. Employerswant to foster teamwork and open communication. Instead, they may endup with sales people who are disgruntled and de-motivated, fighting over

customers and devising subtle methods of cheating the system.Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 44Some creative ways successful companies do itSuccessful companies have found creative ways to harness the competitive,incentive-driven nature of good sales people, with a minimum of negativebackfires. For Mary Brown, Director of Western Region Sales Operations forRight Now Technologies, this includes ingenious approaches that rewardindividual performance while building camaraderie and teamwork.For example, the company will sometimes sponsor raffles for trips or specialmerchandise. The more a sales person achieves, the more "chances" theyget in the raffle yet everyone who produces has a shot at winning. Often,

Mary provides non-monetary incentives that are fun for employees and theirfamilies. A video camera. A mountain bike. A week-end at Big Sky (a localresort). Or she may provide extra days off if sales quotas are met - to beused at the employees discretion. The point is, great companies like Rightnow use innovation and creativity to stay ahead of the employee motivationcurve. By developing incentive programs that are exciting and unifying, thecompany and the employees both win.What can a small business do?To the century-old Owen House Hardware (an institution in downtownBozeman, Montana, a different creative approach is taken. As managerLarry Bowman explains, the key to retailing is to serve with excellence,every customer who walks through the door whether they are buying a

riding lawn mower or a package of thumb tacks. Commissions and bonusesbased on individual sales numbers tend to counteract the Owen Housephilosophy, and prompt sales personnel to "push" large ticket items andcompete over customers.Larry has tried a number of things over the years, but is convinced that forhis type of business, incentives should be provided to all personnel (both fulland part time), based on store-wide performance parameters. Currently, theSales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 45


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company is giving to each employee, credit toward in-store purchasesbased on monthly improvement in average ticket sales. The credit iscomputed daily, and entered on a calendar where everyone can see theircollective progress. As with most incentive programs, it's difficult toobjectively measure its success. Larry isn't sure how many employees areknowingly motivated to boost average sales, but at the very least, the

program focuses everyone's attention on the worthy goal.Another ApproachAlan "Fish" Fishburn, manager of the Mini-Nickel, has his own philosophyabout employee incentives. Fish strives to build a sense of family among hisstaff, recognizing that "there's more to a job than a paycheck." Failure isn'tpart of Fish's vocabulary, and when the office has a poor month, there's nofinger pointing or blame-taking. But in the good months, he likes to rewardthe whole staff, by taking them and their families out to dinner, bowling onSaturday night or some other enjoyable, bonding activity.Individual rewards are certainly part of Fish's program, too. But very oftenthese bonuses are given spontaneously, when the person least expects it,rather than being a routine and predictable thing. He also believes that sales

people respond better to targets that frequently change, rather than settlingin on a regular system of rewards and bonuses that become a standard partof their pay.Most importantly, Fish believes in the concept of mutual trust. He doesn'tsweat the little things or keep his sales force on a time clock. He's strictlyresults-oriented, building maximum flexibility into his company policies -from minding kids (and occasional pets) at the office, to cheerfully givingtime off when it's needed. In the end, it's not about money, says Fish(although he pays significantly higher than most others in his industry). "Ifyou need to continually bribe a person to sell, you've probably hired theSales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 46

wrong person. What motivates the true sales person the most is pride intheir work and the positive feedback they get from their customers. Andfeeling empowered and valued by the company for which they work."The last word on motivating sales peopleObviously, employee incentive programs are not a one-size fits allproposition. As these successful companies demonstrate, differentapproaches work best in differing situations. But the conclusion is that"motivating sales people" is a contradiction in terms. Sales people - if theyARE sales people are already motivated. The challenge employers face ischanneling that motivation, and maintaining it at peak levels, week in andweek out.Creative, well-conceived commission programs and bonus plans can

certainly help in this regard. But ultimately, the most important factor lieswithin the heart and soul of your business itself. If a sales person identifieswith the culture and mission of your company, and feels a sense ofownership in your company's future, then you will most likely have a loyal,motivated employee whose consistent performance levels will help youreach for the top.Self Assessment Questions IIState whether the following statements are True or False:1. Employee incentive programs are a one-size fits all proposition.


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2. If you need to continually bribe a person to sell, you've probably hiredthe wrong person.3. By "extraordinary information" we mean information one can't get anyother way.Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 47

3.7 Compensating Sales PersonnelSales Compensation and the E-worldWith more customers ordering goods and services from the Web, questionsare being raised regarding sales commissions, account ownership andquota allocation.Will sales compensation become an e-relic of the 20th century? With therise of e-commerce, the sales department looks slated for decommissioning.Why employ a salesperson when customers can use a mouse to point andclick their way to purchases?While the volume of business that is sold through the Internet will soar toalmost incomprehensible levels, the death of the sales department is apremature assumption. Even dot.com companies are finding they need to

hire salespeople to help promote their products. In fact, one of the fastestgrowing sales employment segments is advertising sales representatives forWeb-portal companies. These companies have learned that when choice isavailable, uncertainty is present and risk is inherent, a salesperson can helpguide customer decision making. Thus, the two criteria for salescompensation use are customer contact and customer persuasion.Therefore, selling will continue into the 21st century, as well as the use ofsales compensation. However, employers need to be prepared for majorchallenges to sales pay programs. Consider these issues: Should the salesperson receive sales credit and thus incentive paymentfor orders put through the Web?Who owns the customer the salesperson or the Webmaster?

Should salespeople encourage their customers to use the Web to orderproducts?What sales compensation practices should be avoided in a Webenabledenvironment?Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 48These questions currently are being debated within sales departments.Compensation managers can expect to have some of these issues land ontheir desks. What follows are key concepts and suggested perspectives toassist the sales team in sorting through these issues.The Mysterious World of Sales Management Subsystems:As a pay program, sales compensation is connected to several and

sometimes mysterious sales management subsystems such as accountassignment, sales crediting and quota allocation. Evaluation of the salescompensation program cannot proceed without concurrent examination ofthese complimentary supporting systems. While most of us are very familiarwith the typical features of a sales compensation plan targetcompensation, mix, leverage and incentive formula it is the operation ofthese sub-systems that dramatically affects payouts. The rise of ecommerce,generically known as a sales channel, will require significantrevisions to these subsystems. Make these changes correctly and the sales


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compensation pay system will continue to operate successfully; make amistake and the pay plan will fail.A Web Site Held Hostage:Point and Click Meets Brick and MortarThe president of a major furnitureretailer explained her predicament.

Look, I know the Web site can giveme access to new customers, but20 percent of my customers accountfor 80 percent of my revenue. And,my in-store decorating salescounselors own those relationships.She added: If I don't give themsales credit from Web sales, mybest sales producers will quit.Should salespeople get sales credit forWeb sales for out-of-region sales?What about sales from first-timecustomers?Should salespeople get full credit forthese non-store new Web customers?How can the Web support itself, if it mustbear the burden of commission creditsback to the sales counselors?Sales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 49The president was adamant. She willnot risk the ire of her bestsalespeople. Unless, I give thecredit for sales over the Web, theywill complain that I am taking moneyout of their pockets. Yet, stillunresolved are the following

questions:Which salespeople get what Webcredit?These and many related questions needimmediate attention. Ultimately, she willhave to decide if the Web site is a salescounselor tool, or a separate saleschannel. Perhaps she needs two separateWeb locations: one for value-addedservices provided by sales counselors anda second Web site for unassistedpurchases.Start with the Role of the Salesperson

To investigate all of these issues, begin with a reconfirmation of the sellersrole. Answer this question: What is the salesperson expected to do? Get new customers. Sell new products to existing customers. Keep existing customers happy with their on-going purchases. Provide customer support and order fulfillment help.What about the salespeople? Are they expected to do one, some or all ofthese activities? Sales compensation plan design is related directly to thecontent of the sales job. For sales jobs with more individual initiative and


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persuasion, more at-risk/high upside variable pay should be used.Conversely, jobs that focus on more reactive duties such as customerservice and order fulfillment should have less variable pay.A Simple Rule: Pay for the Point of PersuasionIn sales compensation design, the rule of thumb is pay for the point ofpersuasion. In other words, pay a salesperson for the job of persuading the

customer to act. This is where sales compensation fits. Not following thisrule gets many sales compensation plans into trouble. Such salescompensation plans have too many performance measures, incorrectmeasures, or provide rewards or punishment for results outside theSales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 50influencing scope of the salesperson. Finally, many sales compensationplans simply become obsolete over the passage of time. For example, in astart-up company where the selling role is 100 percent persuasion, the paysystem features a high risk/high reward design. As time passes and thesales rep develops a large embedded base of business, the pay programneeds to migrate to an account management model with a higher base

salary component. The mistake is to leave the high risk/high reward payplan in place an all too common occurrence.How will E-commerce affect the Sales Force?The primary role of the salesperson is to persuade. If other resources suchas the Web site can handle re-orders, then a salesperson should not bedistracted by these duties. If a customer already knows what he or shewants to buy (a standard product with little uncertainty), then there is noneed to involve and reward a salesperson. In such cases, it is appropriatefor the customer to order the product via the Web, without the involvementand reward of a salesperson.Now comes the challenge: How should account ownership, sales creditingand quota allocation be handled?

Making Adjustments to the Sales Management Subsystems:As noted above, the sales compensation program is more than just a payoutformula, it depends on the effective application of critical subsystems suchas account assignment, sales crediting and quota allocation. Note how salesmanagement must augment these subsystems under the following ecommerceconditions: E-commerce is primarily for order fulfillment of products sold bythe salesperson. In such cases, the salesperson is acting as thepersuading influence; therefore, the account belongs to thesalesperson, and all sales placed through the e-commerce site areSales, Distribution and Supply Chain Management Unit 3Sikkim Manipal University Page No. 51

credited to the salesperson for compensation purposes. Quotaobjectives include all sales volume placed through the Web andcontribute to quota performance accomplishment. E-commerce is used primarily by buyers who do not need salesadvice. These accounts should not belong to the salesperson, norshould such volume contribute to retiring quota a

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